Wunderkind Success Story: Diane von Furstenberg

Gabby Hirata: My name's Gabby Hirata. I'm an intern here. No, I'm a CEO at Diane von Furstenberg. I have been leading the company since three years ago and has been really a amazing journey. This is really cool because I actually have not officially talked about it. I always tell my friends, " I actually got promotion like two weeks ago." And my friends said, " Wait, how would you get a promotion? You're already the CEO president." So my official title was the president of DVF A couple of weeks ago. After this three year journey of transforming DVF, I just got promoted to be the CEO of Diane von Furstenberg. And it's really quite an incredible journey starting from literally January, 2020 where I was a mid- level employee here, head of APAC. So this journey from head of APAC, which is director level to president and then to the CEO, really is reflective of a changing mindset of how American Legacy Designer company is changing as the customer is changing, adapting to really the new consumer world. I think deeply about it. As I said, actually in front of the board, the DVF family for the first time, for my first board meeting, I say at DVF, within DVF, we talk about how amazing, how life- changing this American legacy brand is. But I realized I need to raise my hand and say our customers have been changing. Our revenue was declining slowly for a few years. And I think the challenge we faced, a similar challenge, Tom Ford, all of the other fashion brands face, which is, and I always remember how Diane described it. She said, " There's a window and this is your core customer." And DVF's core customer had always been woman from their 20s all the way to 80s. Our core customer is woman from 30, 35 to 40, 45. What's fascinating to me is that this customer, she kept changing here, the brands we need to change and grow with her. At the same time every year, our 30 years old customer become 31 years old. So every year we need to grab another 20, 000 30 years old. So when we think this way, we realize, " Oh wow, it's really hard to adapt and grab the new 20, 000 women who's 30 years old." Why? Because every fashion brand talks about legacy, talk about what we stand for, talk about timelessness. So it's really, really hard to change our behavior, change how we make decisions from design to all the way creative marketing emails, to make what is relevant to the new 30 years old. So that became the cornerstone of my proposal to Diane von Furstenberg and the DVF board about how we're going to innovate and DVF to make DVF the most relevant, the most admired brand to the new modern group of customers around the world. I was our history major, so I studied the history of DVF as if I studied subject. And what we learned is that DVF was the dress of the decade for the '70s and'80s, right? Every professional woman who goes to work, who went to work in the '70s and'80s bought a wrap dress. That was the anchoring point, the foundation of the success and the love DVF, the fashion brand, had. So what's very interesting is that in the early 2000s, DVF had another really peak in the business where we had the success attracting the 30 years old, that professional woman who made her money, who had a very clear idea of the woman she wants to be. And she buys the wrap dress, we call it anchor lady dress where she feels confident she goes to work. And then in the early 2010, 2015, what we realized is going to work, the outfit, the culture, the woman's lifestyle is changing and then it changed even more drastically in 2020 when pandemic hits. So every day, Diane and I talk about, Diane von Furstenberg and I, talk about, okay, what does she like now? What does she like to wear? What content does she like to see? And that's a million- dollar question, actually billion- dollar question, no one knows. And that's like the hardest thing in the fashion industry. Designer space is so subjective and it's so emotionally intense who get to decide. So this is where my passion, our passion, our love, our appreciation for Wunderkind is so tremendous because now there's a way to test, there's a way to form, out of 100,000 customers or 50, 000 customer in our email database for DVF. com around the world, there's a way to know what content she likes. There's a way to give her the content exactly what she wants, how she wants, when she wants it. It's all true because everything's automated, everything's triggered. And this whole journey of almost two years with Wunderkind has taught us, oh my gosh, yes, it's subjective but not our subjective, ego- based decision. It's our customer decision and there's technology that allow us to give her that. That understanding gives us really a tremendous insight about our 50,000 customers in our database or over 100,00 customers around the global, including DTC. I describe her, if I draw a portrait of a DVF customer, I would say she's a woman from her 30s all the way to late 40s. Half of she is professional woman. She's also a mom. inaudible. She's also a creator. What is a common thread among these 100,00 women and I describe in really in front of board and our team, I say, " Please imagine this room. Please imagine 100, 00 women standing here and look at who she is and think about what she wants when we make this crucial decision about design and the creatives." A common thread is that she is a woman in charge. She wants to design her life. She knows what she wants. I wanted to be a CEO one day of an American fashion brand. I literally wrote this in my journal when I was 18 years old on the plane from Beijing, that was my hometown, to New York. And I know to get here what I have to do for interns, what I have to create my core competence. I wanted to be confident because I know how I can do a pitch to get someone to hire me. It's very similar for other DVF women, we just know what we want. And to give her what she wants is what we think about every day at DVF. My very first proposal that got me the position of president of DVF was all about digital transformation, e- comm and creating a shared identity with our audience on the global stage. If you are a established designer brand, that means most of the time you have already established yourself before the internet, the social media, before the 2000. In our case we started, Diane von Furstenberg started her company in the 1972. So what that means is when you think about revenue and China as a CEO or president of a company, if your existing structure is heavily based on stores, retail stores, physical location and wholesale business, which is the case for most of the designer brands, of course your attention, your energy, your time will be focused on growing that, maintaining that. However, the understanding of, wait, customer's changing. She doesn't want physical to a store. She likes to have this kind of feeling, emotion, when she sees the brand she shops, that's something that she enjoys. She no longer wants to hear what the brands talks about themselves, she wants to hear about what's the shared identity mission, what it stands for between the brand and what she stands for. And she shops digitally, not physically, but online. So all of those means if the brand doesn't service the customer in the way she wants, that's a distribution model innovation, then you are just going to slowly lose the customer. And what does that mean for CEO or CFO is suddenly, you see your revenue somehow just does not grow 10 to 15% a year. Somehow, you see your revenue, everything you do, all the hard work, investment, marketing, somehow your revenue stays flat or sometimes it declines. And that was the starting point three years ago for us at DVF to decide we're going to make DVF the most admired company in the world. We are going to be financially independent, we're going to make great profit, we're going to have a 20% year to year revenue. How? Let's make DVF.com the best website in the world. Let's have all the technologies. We're talking from Salesforce to Shopify, onboarding the best technology providers and having a new decision- making mindset about this shared identity between our audience and our brand. And that was the beginning of our digital transformation. I have to say it was the most impressive thing ever to see how our revenue grew and is growing with Wunderkind. It is so striking that I remember using this one slide, our e- comm team made with Wunderkind, using it in the board meeting to our board members and DVF family. Why? Because it's undeniably impressive and almost life- changing, changing the life of every decision maker, everyone, every team member at DVF. Why? Because it went from zero, obviously when we started with Wunderkind, the trigger emails, the automated emails, all of that was zero. And now if you imagine a pie, so this is a pie... I'm going to give you some confidential insider data about DVF E- comm worldwide... came of nowhere in the blurring red comes from Wunderkind. So when you have something like this, obviously, our team used Wunderkind to work very hard, right? For me, when I have such a insight, I immediately know what I need to do with such a fact. I take it to our founder, to our executive board, to our design team on the product design and then with our creative team, which we're already working very closely with e- comm team. So that means, oh my gosh, if we somehow are technologically empowered to give our customer and our audience what she wants, she, that woman, again 100,00 women, is going to give us, " Thank you so much. Here's my vote of confidence. I love what I see. Here's my money." That saved us, that gave us this anchoring point now in the phase two of DVF, which is to grow and to expand. This is probably one of my favorite topics and I'm most blessed for Diane von Furstenberg herself to empower me to talk about, which is DVF as one of the many legacy established designer brands who were struggling from a bottom line perspective. And Covid only accelerated that. What has happened as part of this digital transformation in the past three years is that we now have more than 12% profit margin, meaning our bottom line is not only in green but it has a very comfortable nice profit margin. How did we do that? Well, if you imagine if we used to spend x million dollars on marketing, our marketing budget... actually, I never talk about this. Our marketing budget now is about 25%, a quarter of our marketing budget in 2019 to 2020. That's just a fact. So when I'm talking with our creative team or with our design team or with Diane herself, it's most fascinating to me and I kind of frame it that way. " Wait, do you guys know? Let's talk about this." Right now, we service around 3, 000 customer each month. We have about 45, 50,000 customers globally on DVF.com. We have about over 200, 250,000 people in our audience, in our global mailers. So that's kind of the audience. That's the audience where our Wunderkind emails go to and text messages go to, again, 250, 000 women. So somehow we're able to gain that audience, engage with that audience and then harvesting 3, 000 paying customers every month while spending a quarter of what we spend even just one year ago, 2020, one year ago. When you have a line item that went this much, your revenue is this much, our revenue year to year right now, and thanks so much for e- comm team and solution like Wunderkind, 20% year to year revenue growth. If you look at e- comm alone is 36%. So this year the goal we submitted to the board has fixed 36% growth and this is to show how confident and how ambitious we are, and that all of that work together to give us a profitable bottom line. And as I said to Diane and Talita, our co- chairwoman as well, Talita von Furstenberg, what this profitable bottom line and what's technology and giving customer what she wants give us is that now we're going to stay here. We're going to have sustainable growth. And when I say sustainable, I mean from a business, from a finance perspective. We can invest, we can now have a long, seven, eight year plan to grow our business because we are here to stay. It's really funny because a couple weeks ago when I was chatting with our Wunderkind team, I would say, " Oh my gosh, we're so grateful for you guys." Now, the Wunderkind revenue is really matching. It's the same as our right now the branded email, so it's half and half. But as of today, it's actually surpassed. It's more than our in- house branded emails. So it is not just the achievement, it is growing every month via emails, text messages, as well as subscribing their subscriber, keeps throwing this woman into our funnel. 200, 000, 250,000, 260,000 women around the world. What I am always so impressed is whenever I drop in the weekly meeting, our e- comm team has, Sarah Townsend who runs our email initiative with the Wunderkind team. It really feels like Wunderkind Team is our in- house DVF team. I remember looking at, I think we had a 50 algorithm going. Basically, they are, and this is what I love seeing the most, 50 plus algorithm in our Wunderkind DVF portal. So what does that mean? If you kept looking at this wrap dress, you haven't bought anything, no human being at DVF because we have a very small team, does anything. However, you're going to be served up with the email, 15% off, I see you eyeing this dress. And now this even smarter algorithm with Wunderkind, our e- comm team, where if you bought this wrap dress two years ago and you haven't bought anything and we know, okay, we want to engage with you and we want to reengage and have you become repeated customer, we're going to give you... look at this now, there's a 12 new wrap dresses where there's 12 dresses based on this print that you bought and we know you love. Again, no human being touch it. It's part of the 50 algorithm that's churning out those individualized email, every day, every hour. And that translates to somehow every month we see more revenue via the trigger email with Wunderkind and text messages. Somehow we see more subscribers falling into our funnel. Why? Because we even AB test. When I say we, really Wunderkind, AB tests a subscriber, the little popup window. We have the picture, with the welcome you. We have, when you subscribe, we have all of those trigger emails. Again, no people touch it. Welcome you to the world of DVF, welcome to the house of DVF. Here's our loyalty program. Here's the history of wrap dress. Here's 15% off. Oh my God, thank you so much for your purchase. Here's some additional similar dresses that we love to... here's the invitation to come to our headquarters for in charge activation. All of that allows us to have a very nimble, small team. We talk about profitability. Having a small team is crucial. I can say to you before our e- comm team was 30 plus people. Now our amazing e- comm team is eight people all combined from 30 people to eight people. If you're a CEO listening to this, you know what that means, right? That means profitable bottom line because your team is smaller and the management is easier. Things get done faster. And this is what I think so many providers, and I'm sorry I'm really passionate about Wunderkind. So many providers have similar, okay, trigger email customization, all of that. I have to say the number one thing Sarah, our e- comm team, talks about and what I witnessed is that the Wunderkind team, it's just amazing people. It's really the people who are in the trenches with you. And let's face it, for a small designer brand, every day is kind of like battleground, every day is daily training activity. The Wunderkind team is in the trenches with us, is sitting down with us, teach us from zero algorithm when we started to now 50, 55 and continuing our text message. Guys, you know text message is the fast- growing sector. You guys should do this and this and we'll see the result and what doesn't world let's work together. That relationship and now has been almost two years, it'll be two year anniversary by May this year, is the most lab changing. Not only for our e- comm revenue, but also I would say for DVF as a whole, the organization, the way we think, the way we appreciate and are empowered to give our customer what she wants. I have learned from Diane that she taught me, Gabby, when you think about our age of our customers, it's not about younger or older, it's about multi- generation, how DVF is connecting with women in their 18, 20 years old, all the way to 80 years old. So I always remember that. However, when you look at the behavior of customer by generation, there is clear pattern. I think for our customers in their 20s and 30s, how everyone's on their phone, how everyone's shopping via text message. And sometimes it's hard to see because she will get that text message and she'll jump into a browser and she will pop in that link to shop. We have almost 50,000 customers around the world, just on DVF. com alone. It is almost impossible to make those decisions, human decisions. Because we don't sit here and be like, " Oh, these five customer who are 25 years old likes to shop via text message. Let's send her a text message promotion." It's not possible at all. So with Wunderkind, we're able to send out massive email program, customized based on this behavior, right? It's such a no- brainer. If you shop via text and you shop via text a couple of times, we would give you a text message, not email. Why? Because we have one, again, a human brain almost to churn this out so we don't have to think about it. Again, we have hundreds of campaigns going out, 50 plus algorithm any given day and we kept building more, kept going down further. What's your behavior? Let me give you, based on the pattern of your behavior, based on your preferences from a creative visual perspective, based on the transaction, the styles you love. So three lanes to serve you no matter if you're 20 years old or you're 80 years old. I would say without this customized approach, without this customer segmentation approach, because there is a clear customer segmentation we observe in our 25 years old customer, it's fascinating. I can talk about that forever. But with those clear customer segmentation and with our email program, with Wunderkind, we're able to be engaging and be authentic and be attractive. We look differently almost, for our 25 years old who shop via text messages to our 80 years old who shop via calling the customer services. And I think we're going to continue as we gain more and more customers for this new DVF we're creating. We're going to continue to respect each customer as she knows the best and give her what she wants. I always describe our mission at this new DVF or dare I say, this third act of DVF, as how do we keep innovating while staying true to our brand DNA? So DVF brand DNA is woman on the go, effortless confidence, the ease, the how clothing should be flattering, make you feel good and comfortable and make you feel confident. So how do you take all of the DNAs and then update your product? We make those decisions based on who is that customer, right? So you see me reciting our customers again and again, how many of her, over almost 50, 000 customers, global wide, e- comm. Another 50, 000 customers for our DTC channel and another 36,000 customer from our retail partners. So all combined, 138, 138, 000 women. So she, from 20 years old all the way to 80 years old, she informs us, " Okay, Gabby, I want this and this, but I don't want something that doesn't look like Diane's brand anymore." So that expectation from the 138, 000 women comes to us every single department who makes those decisions, from design to print, to email to our campaign assets, to our social media. We always try to adapt to this expectation from our growing and changing audience and customer base, and innovate our product, our marketing approach, our management principle, our creative decision, our print design, down to our retail management. Oh, wow. I love this topic so much. At DVF, I describe DVF not as a luxury brand. I describe DVF as affordable luxury. I describe DVF as we make uniform for women in charge. No hassle, easy, our tagline of 50 years, the best brand in your closet. You always have the days you don't know what to wear, you don't feel like wearing anything, and you go into your closet and you grab that wrap dress. Best friend in your closet. Just easy, looks good. Don't have to think much. When we have uniform for women in charge, we think about that woman's lifestyle, right? She's now not wearing pencil skirt, pencil skirt used to be our top category. She's no longer wearing pencil skirt to go to work. She now is so busy she wants to go to work, look really nice, and go to a date after or go to a party after. So I can give you a little insider secret. Every single product we make, we have this little checklist. Can she wear this to work? Can she wear this to an interview? Can she wear this to a date? Can she wear this to a wedding? Can she wear this to a cocktail party? Every single product we make. And this is the same spirit I have to say, even when Laura, our head of our creative making decisions about campaign, does this create emotional connection? Does this also show clearly what the product looks like? Does this also tell our customer what this will look like on different bodies? We have those, I call it multi end use, this strategical mindset, which is again, does our audience and customer like and find this useful? Design, email, campaign, social media. That is the new mentality of this new DVF and that allows us to churn out product that looks different, but also look exactly DVF, to our 138,000 customers at the right price point. I'm really proud of our e- comm team. They're able to achieve less than 30% discount rate. So what that means is that every 100 dresses we sell, 70 dresses are sold at full price. What that also means, our pricing structure is no longer over$1, 000, it's now the average price for a dress is$ 400. And that price point is sharply set using premium fabric, really good versatile design. Again, multi end use. And then with the 138,000 woman in our mind, her lifestyle, what is her life? She's dropping off her kid in the morning, go to work and then go to a post- work cocktail function and then go home. Which really, if you look at even what I'm wearing, you can tell I can get all of those duties done in the same dress. And that functional first mindset is how we will continue to lead and innovate this American legacy brand into 2030, 2040. When I made the proposal to Diane von Furstenberg and the board in May, 2020, I gave a 10- year plan. And that was something I remember they were really impressed, but also find it fascinating. Because I think the average tenure for CEO is somewhere around two to three years in general. And when I made a 10- year plan, I felt like I was speaking on behalf of every single employee at DVF. Our passion for this brand, our passion for over 130,000 women, our customers, is so tremendous. We can only think for this brand, long- term. I think in our team, we think about DVF, what DVF will look like 10 years from now. We want DVF to be the most admired brand by our customers, by our employees, and by our shareholders. So what that means, I imagine we're going to double, triple how many DVF customers are there out in the world. When I said to Diane, who is in her 70s, and focusing on woman empowerment and everything, I said to her, " Our goal"... and it's fascinating how you can take the business goal, which is revenue, which is the profit together with legacy. Diane taught me so much about how to think about legacy and her legacy of course is one to inspire more women to be the woman you want to be in. I realized, oh my gosh, the more customer and audience we touch and attach effectively via Wunderkind, via other social media strategies, the more audience we touch right now is 250, 000 and two million on our social. In two years, 500, 000 and four million. The more women we can touch and the more customers we can acquire by doing a good job, product design, marketing, creative, e- comm, DTC, the more eternal this brand will be. The more women in their 18 years old, 20 years old will fall in love, will get to know DVF and fall in love with DVF. And that really inspired us and inspire Diane herself to continue and to make DVF really eternal legacy to help all of the women around the world to become the woman I want to be. If I wanted to be a CEO when I was 18 and I worked the nights, I worked the weekend, when an opportunity comes, when Diane calls me, be like, " Gabby, I don't know what to do with this brand, what's your suggestion?" I was ready. I had the plan, I had the drive, I had the functional business knowledge, profit center, focused on e- comm, focused on digital, customers, customer- centric mindset, all of this. And then I was given this opportunity to truly become the woman I wanted to be. Every single day at DVF in the CEO position, I'm just so privileged, so grateful. And every single team feels that way to work in this woman- led business. We wanted to take all of those blessings, those privilege, those happiness, those everyday... the biggest joy is living your life and feel like you're becoming the person you always wanted to be. We want to take all of that appreciation, including the appreciation for Wunderkind for our solution which allowed us to achieve what we achieved. We want to give it to a lot more women, millions of women around the world, maybe billions. And that is 10 years from now, if I'm still in this position, I'll look back and I hope I say, " Wow, we did this. Now we have inspired and helped." It's not just about selling dresses, right? We have helped hundreds of millions of women somehow decide, " You know what? This is the woman I want to be. I'm going to change my life today. I'm going to live the way I want." Just like how Diane started her business in the'70s, how I was blessed, how our teams are given this opportunity. So that's how we think about DVF 10 years from today.